The gold/oil spread is up

The appetite for risk remains very limited ahead of the US open. Even though deputies allied to Greece's three-party government approved the budget with a comfortable majority of parliament's 300 seats, traders remain worried following the declining GDP in Japan and because of ongoing fears about the US “fiscal cliff” and its negative impact on the markets and economy.

The European and yen open little changed after plummeting for three days. The commodity currencies open slightly higher following the surging Chinese trade surplus. The Asia/Pacific stock indexes ended mixed. The European bourses are mixed, while the US stock markets are little changed in pre-open trading. The gold/oil spread is up.

The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies. Good luck!

Overnight

China: The trade balance surplus surged to $31.99 billion in October from $27.67 billion in September.

Japan: An index measuring the prices of domestic corporate goods was down 0.3% in October following the downwardly revised 0.2% increase in September

Japan: An index measuring tertiary industrial activity rose 0.3% in September following the 0.4% increase in August.

Japan: GDP was down 0.9% in the third quarter following the 0.2% increase in the second quarter.

Japan: Machine tool orders decreased 6.7% in October year-on-year.

Today's economic calendar

No data

EUR – December

The LGR Model: Short since October 19

The December euro opens under pressure after falling in five of the past six days and hitting a two-month low on Friday. It is trading below the 100-day exponential moving average. The euro peaked near a four-month high on September 17 and bottomed at an over two-year low in July.

The short-term outlook is sideways. The medium-term outlook is sideways and my model is short.

Immediate support is at 1.2695. Further support is at 1.2628.

The 100-day exponential moving average resists at 1.2802 and the 21-day exponential moving average caps at 1.2866.

INDICATORS

Fast stochastics: Bearish

MACD: Slightly bearish

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

JPY – December

The LGR Model: Short since September 28

The December Japanese yen is consolidating after rising for three days and spiking to a three-week high on Friday. The yen is trading above the 21-day exponential moving average. The yen had bottomed at a four-month low on October 26 and had peaked at a seven-month high on September 13.

The short-term outlook is sideways. The medium-term outlook is sideways my model is short.

Immediate support is at 1.2550. Further support is at 1.2475. A pivot low is at 1.2399.

Initial resistance is at 1.2650. Further resistance is at 1.2705.

INDICATORS

Fast stochastics: Bullish

MACD: Slightly bullish

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

GBP – December

The LGR Model: Short since November 7

The December pound remains weak after falling in five of the past six days and hitting a two-month low on Friday. It trades below the 100-day exponential moving average. The pound marked a new high for the uptrend on September and bottomed at a 4 1/2-month low on June 1.

The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.

The 200-day exponential moving average supports at 1.5874. Further support is at 1.5785.

Immediate resistance is at 1.5925. The 21-day exponential moving average resists at 1.6016. A short-term top is at 1.6173.

INDICATORS

Fast stochastics: Bearish

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

CHF – December

The LGR Model: Short since October 19

The December Swiss franc is marking time after hitting a two-month low on Friday. It is trading well below the 21-day exponential moving average. The franc peaked at a high for the uptrend on October 17 and bottomed at a 19-month low on July 24.

The short-term outlook is sideways. The medium-term outlook is sideways my model is short.

Initial support is at 1.0500. Further support is at 1.0413.

The 100-day exponential moving average caps at 1.0623 and the 21-day exponential moving average at 1.0656. Distant resistance is at 1.0787.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

CAD – December

The LGR Model: Short since September 17

The December Canadian dollar is consolidating around the 200-day exponential moving average after sliding to a two-month low on Friday. It is trading below the 21-day exponential moving average. The Canadian dollar had marked a high for the uptrend on September 14 and bottomed on June 1.

The short-term outlook is sideways. The medium-term outlook is sideways and my model is short.

The 21-day exponential moving average caps at 1.0049. Further resistance is at 1.0155.

Immediate support is at .9959. Further support is at .9900.

INDICATORS

Fast stochastics: Bearish

MACD: Sideways

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

AUD – December

The LGR Model: Long since October 16

The December Australian dollar opens a little higher after marking a four-day low on Friday. The reversal on Wednesday formed a likely bearish reversal pattern (hangman). The Aussie is trading above the 21-day exponential moving average. This leg of the uptrend started on June 4. The Aussie marked a high for the uptrend on September 14.

The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.

A short-term top is at 1.0446. The top of the uptrend is 1.0537.

The 21-day exponential moving average supports at 1.0327 and the 100-day exponential moving average at 1.0241. Distant support is at 1.0160.

Cornelius Luca is an author and President of Luca Global Research.
Mr. Cornelius Luca has been engaged in trading and consulting about global currency markets since 1983. He has taught courses covering the foreign exchange marketplace, foreign exchange trading, foreign exchange mathematics, currency futures and options, and technical analysis at New York University, the New York Institute of Finance, and the Lubin Graduate School of Business at Pace University.

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